China is mired in a tough spot as global economies turn against it one after the other, for reasons we all know. While it has been reveling for long at the top of the tech assembly industry, that won’t be the case going forth. Well, at least that’s what the Taiwan-based Foxconn posits.
Foxconn (formally known as Hon Hai Precision Industry) for the uninitiated, is one of the leading electronics contract manufacturers in the world. After revealing its recent financial results, the company CEO, Mr. Young Liu said that China’s days as the world’s factory are done.
The company is already ahead of its counterparts in diversifying out of China. It assembles around 30% of its products outside China and Liu envisions this to grow going forward.
“No matter if it’s India, Southeast Asia, or the Americas, there will be a manufacturing ecosystem in each,” he said to investors.
Foxconn has already moved the iPhone 11 production from China to Chennai (India). Further, there have been reports that it has a $1 billion expansion plan for India.
Meanwhile, another Apple ODM named Wistron (Chinese) has announced an additional $45 million investment goal for its Bengaluru subsidiary.
Coming back to Foxconn, although its smartphone revenue has slumped a bit, due to the pandemic and US-China trade tensions, it has still shown promising year-on-year results and surpassed analyst expectations. Then, there is the concern for anticipatory loss from the dent in Apple iPhone sales, once Trump’s proposed WeChat ban takes place. This is because Tencent owned WeChat is heavily tied to Chinese everyday life and without it, natives will rather switch to local brands.
However, this might not impact Foxconn much, as per Kirk Yang, chairman, and CEO of Kirkland Capital. He argues, even the indigenous brands like Huawei, Xiaomi, or Oppo are also Foxconn customers. “So, Foxconn might lose iPhone (revenue) a little bit, but they can gain from other non-iPhone customers,” he foretells.
So, is China’s tech dominance doomed to fail? Are its days as World’s factory numbered? What do you think?